On January 1, 2023, Pronghorn Limited pays $105,753 to purchase $110,000 of Chan Corporation 9% bonds. The market rate of interest at the time was 10 %. Pronghorn accounts for this investment at amortized cost using the effective interest method. The bonds mature on January 1, 2028, and interest is payable each July 1 and January 1. Note that the bond is acquired on an interest payment date and there is therefore no accrued interest for Pronghorn to pay on January 1. Pronghorn has an August 31 year end (a) x Your answer is incorrect. Calculate the amortization of the discount per month using the straight-line method. (Round answer to 2 decimal places, 125.55) su

On January 1, 2023, Pronghorn Limited pays $105,753 to purchase $110,000 of Chan Corporation 9% bonds. The market rate of interest at the time was 10 %. Pronghorn accounts for this investment at amortized cost using the effective interest method. The bonds mature on January 1, 2028, and interest is payable each July 1 and January 1. Note that the bond is acquired on an interest payment date and there is therefore no accrued interest for Pronghorn to pay on January 1. Pronghorn has an August 31 year end (a) x Your answer is incorrect. Calculate the amortization of the discount per month using the straight-line method. (Round answer to 2 decimal places, 125.55) su

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hernandez company issued $380,000, 7%, 10-year bonds on January 1, 2022, for $407,968. this price resulted in an effective-interest rate of 6% on the bonds. interest is payable annually on January 1. hernandex]z uses the effective-interest method to amortize bond premium or discount. prepare the journal entry to record the accrual interest and the premium amortization on December 31, 2022.
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On January 1, 2023, Teal Corporation purchased a newly issued $1,425,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Teal's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model. Click here to view Table A.2 - PRESENT VALUE OF 1- (PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) X Your answer is incorrect. Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) PV $ -1062917.95 4